The Property Tax Debate

With no easy answers, it's time to put every idea on the table.

Property taxes in our state have been out of control for decades. There is no quick fix. It took decades to get this bad, and it is going to take a while to get it right. That’s why all ideas for property tax relief should be seriously considered.

Among recent proposals is one by the New Jersey League of Municipalities that proponents say would allow a 35 percent reduction on up to a $20,000 tax bill on your principal home. According to the League’s analysis, this approach would reduce property taxes on the average home by $2,700.

At the heart of the proposal is a plan to change the state’s income tax structure so that more of the tax burden would be based on an individual’s ability to pay.

“We are not proposing an increase in [income] taxes,” says Gerald Tarantolo, the mayor of Eatontown and chair of the League’s property tax reform committee. “We are proposing an offset in taxes that are already in place for education. We are hoping that, based on empirical data, the offset is less than what we are paying in property taxes for this purpose.”

On the surface, the League’s proposal sounds reasonable. But the reaction under the Golden Dome in Trenton—from both parties—has not been positive. When asked about the plan, Governor Chris Christie said he would “throw it in the garbage where it belongs.” Further, he said raising rates on one’s overall income in an effort to reduce property taxes was “gimmicky” and a “pretend property tax cut”—which was like taking “more money out of the taxpayer’s left pocket, keep a bunch of it and put a little back in the right pocket.”

Christie has never hidden his feelings about the League. He has accused the group of running “corrupt” conventions and said its leader—executive director William G. Dressel Jr.—is “a whiner” whose organization should go out of business. That’s quite a rant, considering that all 565 New Jersey municipalities belong to the League, which describes itself as “a voluntary association created to help communities do a better job of self-government through pooling information resources and brain power.”

After offering their proposal, municipal officials said they might seek a constitutional convention so citizens could vote on a tax-relief plan if the Legislature fails to act.

Democrat Lou Greenwald, majority leader of the state Assembly, said the call for a constitutional convention is a good idea, because “the people don’t trust us [legislators].” However, he did not endorse the League’s proposal to change the state’s income tax.

Declan O’Scanlon, the Assembly’s budget officer and a Republican, opposed the League’s plan. “My concern is that when money comes into the state, the state does not always pay it back [to municipalities],” said O’Scanlon. “If it stays local, the community benefits.” He noted that the state had taken “significant” action to help reduce property taxes by reforming pension and health benefits for public employees.

Legislators from both sides of the aisle also hail the 2 percent cap on property tax increases they passed in 2010 as an important weapon against the rising tide of property taxes.

The League’s proposal deserves careful examination. Tarantolo is convinced that the plan won’t raise taxes and that an appraisal of the latest research would change minds in Trenton. I say the mayor is dreaming. Even if the Legislature takes up the plan and the League gets enough votes in both houses, it’s unlikely the governor would change his mind and sign the bill.

Do we need a constitutional convention on the matter? I think not. But we do need a serious conversation.
The bottom line is that our nagging property tax problem will not be fixed overnight and might need a combination of solutions. Reining in spending of local governments and the 2 percent property tax cap helps; the new approach from the League might also have value. But other ideas, such as mandatory consolidations and mergers of smaller New Jersey towns also deserve consideration. Our overabundance of municipalities is a key contributor to high property taxes. But guess what? You won’t see the League of Municipalities advocating for consolidation any time soon.

No one has a monopoly on how to fix our property tax dilemma and no single idea or proposal, regardless of its source, should be dismissed. New Jersey’s property tax payers simply can’t afford it.